Weakening gold leaves bullion buyers smiling

Gold buyers are in a better mood as the yellow metal fell Rs 600 per tola on Wednesday. Fears of prices hitting new highs due to the festive rush had got potential customers worried lately.

On Wednesday, the Federation of Nepal Gold and Silver Dealers' Association (Fenegosida), the apex body of the country's bullion traders, fixed the price of gold at Rs 56,600 per tola. Gold traded at Rs 57,200 per tola on Tuesday.

“On Wednesday, gold prices in the international market fell US$ 12 per ounce. Since we fix the price as per international trends, the rate has gone down in the local market,” said Tej Ratna Shakya, special member of Fenegosida.

Despite the fall in prices on Wednesday, Shakya said that the volatile international market had made it very difficult for traders to predict where prices would head from Thursday onwards. “Though it's very difficult to talk about the trend, it has given some relief to festive buyers,” said Shakya.

Meanwhile, the approach of Tihar, one of the most widely celebrated festivals in the country, has given a significant boost to the bullion market. Since, buying gold and silver is considered to be auspicious during Tihar, people throng bullion stores leading to a two-fold increase in sales.

According to Shakya, the domestic market's daily requirement of gold currently stands at 35 kg. While normal demand is estimated to amount to 15-20 kg per day, special occasions like festivals and the wedding season send demand surging by more than 50 percent.

The gold rush is expected to increase further on Friday, as Dhantirash is considered to be the best day to buy gold . Laxmi Puja which falls on Sunday is another auspicious day to buy gold . Nepal Rastra Bank has raised the import quota of gold from 15 kg a day to 20 kg, anticipating a rise in demand during the festive season.

“The market has a huge demand of 35 kg of gold currently which is lower than last year's demand,” said Shakya. The wild fluctuations in prices in the international and national markets have discouraged people from buying gold presently.

Meanwhile, silver fell marginally on Wednesday. The metal which traded at Rs 950 per tola on Tuesday dropped to Rs 945 on Tuesday.

According to traders, demand for silver has gone over 100 percent in the domestic market. “While demand for silver remains at around 100 kg during normal days, currently it is around 200 kg,” said Shakya. Demand is expected to reach 400 kg a day from Friday onwards, he added.

Silver cost around Rs 1,200 per tola in mid-March 2013, and the fall in prices presently has sent demand soaring, according to traders.

Bullish to the Extreme

ResCon was established in 2007 with a vision to provide top notch research and consulting services to its clientele. It strongly believes in providing as much data as possible to help investors make correct and timely decisions when it comes to investing in Nepal. Soon after the establishment of the company, it saw Nepse - the sole barometer of NEPSE - hit all time high in 2008. But the jubilance and exuberance was short lived as market started nose diving and all of a sudden, all the excitement was gone. The economy went through one of the toughest periods with real estate taking maximum hit. Had it not been for remittance, Nepal would have hit the rock bottom so hard that it would have taken years to stand right up. Luckily, with Maoists in main stream politics and possibility of dawn of new constitution, economy slowly started picking up. GDP showed positive progress and Nepse started climbing up. For those, who stuck during hard time can breathe sigh of relief.

For us too, had it not been to our positive and optimistic views, we would have gone down the barrel soon. We stuck with our motto - Bullish to the extreme - all these years and we continue to stick to it through thick & thin and ups & downs.

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